Transport Committee on Oct. 3rd, 2011

[The Chair, Conservative, Merv Tweed]

Mr. Albas.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Mr. Chair.

I appreciate the presentation today. I'm going to be asking a few questions relative to what I asked the previous presenters.

CUTA indicated in its May 2011 report on national transit policy frameworks that all G-8 countries, including Canada, have elements of a national transit strategy, as opposed to an actual strategy like the one proposed by the NDP.

In your opinion, is it accurate to say that Canada is the only G-8 country without a national public transit strategy?

[Patrick Leclerc]

It depends how you define a national transit strategy and what you would include in it.

As I mentioned earlier, we're looking at about 30 components of what could constitute a policy framework, and we looked at all the G-8 countries. We also looked at New Zealand, Australia, and the Republic of Korea to see what's out there, what they're doing. If you include the 30 components, there is no such thing as a complete, overall, overarching national transit strategy, but some countries have many of these components. If you look at the U.S., for instance--this is a country we're really looking at, because our cities are competing against each other--they have a good, comprehensive approach to a public transit strategy.

It's right to say that in Canada you have elements in place, but we need to make sure that we complement these with other elements. Given the nature of the political system in Canada, it's really important to design a strategy that would be tailor-made, not to take just anything. We know that transit is a provincial jurisdiction. We respect that, and our aim is to see what elements we could put in place and adapt to fit our jurisdiction as well.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you for that, and I think you have answered half my question with your previous statement. So what I understand from you is that no G-8 country has a complete strategy per se, although some countries may have elements of one. None of them has a legislated comprehensive public strategy. Is that what you're saying?

[Patrick Leclerc]

Again, it really depends how you define it, what you include in the strategy.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Also, we've noticed that rather than speak of a strategy, CUTA has proposed a coordinated national framework of policies and programs to guide investments in the expansion and renewal of transit systems. Can you explain how a framework would differ from a strategy as proposed by the NDP?

[Patrick Leclerc]

Yes. I think the strategy in the NDP proposal is based mainly on what was proposed in 2007 by the FCM and CUTA as well. That was also endorsed by the Conservative government at the time. Lawrence Cannon, the minister at the time, said it was an idea to investigate.

There were five elements: capital funding, R and D, accountability, land use, and tax incentives--the federal employer-provided tax benefit exempt from taxation. And we looked in a more in-depth fashion at what it would mean. That's why we're talking about a framework, because we know that the word “strategy” is used with pretty much anything now. You have energy strategy, you have a strategy for head injuries in hockey, things like that. So you have strategies everywhere, but what we're really looking at is the framework.

The framework guides what you want to do and what you want to include with the provinces and the mechanism to include within the framework to deal with policy integration, for instance. When you look at what is done in some provinces, and the fiscal policies you have, then you can look at how the federal government could match these policies. We're already in discussion as well with the federal finance minister on that. He was open to the idea. But you also need to look at policy integration in a policy framework. How does that fit with your environmental strategy, for instance? How does that fit with your gateway strategy? How does that fit with your innovation strategy? To have it as a framework, it's not that rigid. You give clear strategic directions, objectives and goals that you define as partnerships around the table, and then it's a bit different. Then you have many components. You make sure it fits the country where it is implemented.

[The Chair, Conservative, Merv Tweed]

Mr. Sullivan.

[Mike Sullivan, NDP, York South—Weston, ON]

Thank you very much for your presentation.

We got into a discussion a minute ago about strategy versus framework. They're very similar, in the sense that what we're saying in our strategy discussions and what I hear you saying in your framework discussion is that there's a role for the federal government to play in designing a system whereby funding would happen and whereby.... That's really the number one issue. How do you get money into this system to build it? Where is the money going to come from to build it? And once that happens, once there's leveraging in the private sector, the municipalities, and the provinces, then you triple or quadruple the amount of money that's available and you build the systems. I don't think we're very far apart in terms of what we're talking about. It's all about money.

I also liked what you were talking about when you suggested that people take their cars, really, because it's faster. It's really about time. If there's a public transit system that comes to my door every five minutes and gets me to where I want to go in a reasonable period of time, I'm going to use it. Once you've built something that is that effective, it also, in turn, becomes more efficient, which means it starts returning more of the investment back to the people who put it together. Am I right? The density, as you said with respect to Hong Kong, and the frequency of use and the ability of the system to be convenient and displace cars actually makes it more economically viable for municipalities and maybe the private sector, although it's difficult in Canada.

Is that correct?

[Patrick Leclerc]

You're right.

You touched on the private sector. In Canada, the private sector is really involved in public transit. If you look at the suburbs of Calgary, for instance, you have private operators there. It's the same thing in Montreal avec les CIT. You have private operators there, as well. The private sector is already there.

I agree with you. But people will think, first thing, that we come to the table asking for money and that's pretty much it. This is really not what we want to do. That's why we talk about a policy framework. We want to look, as well, at the implications for the private sector. We want to look at the social inclusion of public transit and at the administrative support.

For instance, there was a policy theme within Transport Canada that has now moved to Infrastructure Canada. We want to know how they work with other departments, for instance, in administrative support and in the level of policy integration.

It's really to have a real overarching and comprehensive approach to public transit that goes beyond funding. But obviously the funding part is there, and it's an important one.

[Mike Sullivan, NDP, York South—Weston, ON]

In terms of the private sector involvement, I'm aware of only some in Canada. There is some private sector involvement, for example, in the city of Vaughan, north of Toronto, where some of that system was set up. But it's heavily subsidized by the province. It's $4 a rider that's being put into that bus system to keep it running. A person pays $2.50 for his or her fare, and the province pays another $4. But it's private, and therefore it's better.

Generally speaking, Canada is too big for the private sector to be a significant player in a public transit system, with the exception, perhaps, of some bus systems, as an operator--as in wall-to-wall, we're going to build a system, we're going to operate it, and we're going to make money. Because there isn't the density to provide it, generally speaking, in Canada. Am I correct is saying that?

I'm not saying that there isn't a role. I'm just saying that you can't just hand the keys to the TTC over to the private sector and all of a sudden it's going to make money.

[Christopher Norris]

That's difficult to say. I wouldn't want to speculate on it either.

[Mike Sullivan, NDP, York South—Weston, ON]

Fair enough.

In terms of the tax incentives, I'm very interested in the notion that the provision of public transit by an employer should be a non-taxable benefit. Can you give us any examples of where that works and how it works?

[Patrick Leclerc]

We know, for instance, that many transit systems have programs. OC Transpo and Winnipeg Transit offer a rebate to employers, and the employers have to match the rebate. The incentive for employers is that it reduces the amount of money they have to pay, because it really reduces their taxable expenditures. They don't pay employment insurance on that part because it's not taxable, and they don't pay on the pension plan either; it is exempted.

Some studies show that when it's a major employer, there's an incentive for them to offer that. As an example, I recently had a discussion with a vice-president at MasterCard. They were really interested to see how they could help make that happen in Canada, because they offer that to their employees in the U.S. They said it was great that when you hire someone and you're based in a downtown core, it's a nice incentive to offer. It's less expensive than offering free parking, because sometimes that's the case. So this is a good benefit they would like to include. It shows that they are socially responsible as well.

[The Chair, Conservative, Merv Tweed]

I have to stop you there.

Mr. Watson.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for their presentation.

I may cover some of the same questions with you that I covered with FCM. Before I get there, vision 2040 is a long way out. Are you asking the federal government to make a financial commitment that far out?

[Patrick Leclerc]

No--for the record.

[Jeff Watson, Conservative, Essex, ON]

That gets tough to justify. Building Canada is a seven-year fund, and it pretty much stretches the limit beyond an existing mandate already.

In consideration of some of the elements of a possible transit strategy or framework, I'll go through some of the same questions here.

Is CUTA looking for a specific dedicated fund to fund transit, or are they looking for that to be eligible within an omnibus program like Building Canada? I think about 40% of that fund ultimately went to transit projects, but it compelled municipalities to sort of prioritize which infrastructure they were looking for.

Are you endorsing a particular dedicated fund, in addition to municipalities being able to access an omnibus program for their other infrastructure needs, or are we happy with the way the BCF has worked? That's really the question.

[Patrick Leclerc]

We're really looking for a cocktail of measures. For instance, the gas tax is working well. There were some programs within the Building Canada fund that were good as well.

In our previous pre-budget brief we submitted--and we're appearing later this week before the finance committee--we're asking for an extra cent from the excise tax to be dedicated to transit. It's not additional spending; it's a transfer of money. We understand that for the government it might mean switching priorities. We're also looking for investment in R and D, or support for R and D in transit and the automotive sector. So it's really a cocktail of measures we're looking at.

[Jeff Watson, Conservative, Essex, ON]

On potential federal funding and the question of cost sharing--how much for each level of government, and what about the private sector--what proportion of cost sharing would you expect to come from that?

[Patrick Leclerc]

When we look at infrastructure needs, our assumption is for it to be equally shared among the federal, provincial, and municipal governments. For instance, in Montreal the AMT just got funding within the P3 fund for a new garage facility. This is something that is extremely interesting that we're looking at as well.

[Jeff Watson, Conservative, Essex, ON]

Okay.

Capital funding has typically been where the federal government has invested. Operational funding, should that be considered or not? The feds typically aren't in that. What are you recommending, that federal funding should continue with respect to funding or...?

[Patrick Leclerc]

Capital funding.

[Jeff Watson, Conservative, Essex, ON]

Typically, it's been the pattern to apply that funding incrementally--that is, for a new project or new construction only, as opposed to funding maintenance costs for existing systems.

Does CUTA have a position on whether future federal funding should remain incremental? Or should it also consider underwriting the cost of maintaining existing systems?

[Patrick Leclerc]

Chris can correct me if I'm wrong, but the maintenance would be part of operational funding, to maintain it. For instance, in some places where you have a fleet that is really old or there can be safety issues, they will replace their fleet with new vehicles as well, fully accessible and greener. That would be considered as well.